DHCR FACT SHEET #29 Division of Housing and Community Renewal CONVERSION FROM ELECTRICAL INCLUSION TO EXCLUSION IN RENT STABILIZED APARTMENTS, NEW YORK CITY When a building converts from master metering of electricity (the cost of electricity is included in the monthly rent) to individual metering, the tenant becomes responsible for paying for the cost of electricity used in the apartment directly to the public utility providing the electricity. This cost was previously included in the tenant's rent but was billed directly to the owner and it is now charged separately and directly to each apartment by the public utility. In order to convert from master metering to individual metering, an owner must first receive permission from the New York State Division of Housing and Community Renewal (DHCR), Office of Rent Administration, by submitting Owner's Application for Termination of Rent Inclusion of Electric Current [DHCR form RA-70 or DHCR form TRI-35c] for rent controlled apartments. If the request is granted, the owner may then proceed with the conversion. After the conversion is completed, the owner is required to reduce the tenants' rents on the first rent payment following the conversion. The new rent established would be the result of two (2) reductions. The first would involve removing prior rent guidelines adjustments for electrical inclusion and the second would require owners to reduce the stabilized rent of each apartment by specific amounts based on usage. The first adjustment, a weighted average based on lease terms, guidelines increases by lease term, vacancy increases, and the electrical inclusion adjustments was constructed to determine the increase in rent from 1974 to 1990. On average, DHCR found the rent would have to be reduced by 6.6% to remove all guidelines adjustments previously built into the rent for electrical inclusion. These adjustments, ordered by the New York City Rent Guidelines Board, date back to the 1974/75 guidelines year. After the rent stabilized tenants' rents are permanently reduced by this 6.6% factor, DHCR then computes the tenants' second rent reduction, which is based on usage, in two stages. STAGE 1 - Temporary Stage 1 lasts for one year and becomes effective on the same date that the 6.6% reduction in the rent stabilized rent becomes effective. The rents are reduced as follows: 1) $25 per month for each studio apartment. 2) $30 per month for each 1 bedroom apartment. 3) $35 per month for each 2 bedroom apartment. 4) $5.00 more for each additional bedroom. STAGE 2 - Permanent Stage 2 is a permanent reduction (like the 6.6% reduction) and becomes effective on the exact date that the Stage 1 reduction ends. The owner must file a stage 2 application after one year of converted status. The rent reduction determined in Stage 2 replaces the standard rent reduction determined in Stage 1. In this stage, the rents are reduced as a result of the owner's monthly savings due to the building's conversion from master metering to individual metering. The owner's monthly savings due to individual metering conversion is determined by a formula based on the pre- and post-conversion cost of electricity, energy conservation, and the differing electrical rate structures. The owner's monthly savings are then shared among all the apartments in the building and the rents of the tenants are adjusted appropriately from the Stage 1 level. This adjustment may result in an increase or decrease from the Stage 1 level. Owners who fail to file for the permanent Stage 2 reduction may be subject to overcharge findings and other penalties. ------------------------------------------------------------ DHCR Fact Sheets (series of thirty) are issued by the New York State Division of Housing and Community Renewal (DHCR) as plain- english informational publications. For official agency policies, see DHCR Policy Statements, Advisory Opinions and Operational Bulletins. Also refer to the Rent Stabilization Code, the Rent Stabilization Law and various Rent Control Statutes. Electronic versions of these documents on TenantNet are for informational purposes only and there is no guarantee they will be accepted by any court (or even DHCR) as true copies of DHCR policy. The reader may obtain true copies of these documents from DHCR. Every attempt has been made to conform to the original Fact Sheets as issued by DHCR; TenantNet makes no representation the enclosed material is current or will be applied as written. The reader is advised that DHCR often fails to properly apply, interpret or enforce housing laws. Since housing laws are complex and often contradictory, it is recommended the reader obtain competent legal advice from a tenant attorney or counseling from a tenant association or community group. (rev. 3/13/96) DHCR documents are public documents; the electronic version of such documents have been developed by TenantNet and any added value, enhancements and/or proprietary features are copyright 1994, 1995 and 1996 by TenantNet. These documents may be freely distributed provided they remain intact as herein presented, including this and the top informational banner referencing TenantNet as the original provider. ------------------------------------------------------------ For more information or assistance, call the DHCR Rent Infoline at (718) 739-6400, or visit your Borough Rent Office. Queens Central Office 92-31 Union Hall St. 4th Fl. Jamaica, NY 11433 (718) 739-6400 Bronx One Fordham Plaza Bronx, NY 10458 (718) 563-5678 Brooklyn 250 Schermerhorn St. 3rd Floor Brooklyn, NY 11201 (718) 780-9246 Lower Manhattan 156 William Street 9th Floor NY, NY 10038 (212) 240-6011, 6012 South side of 110th St. and below Upper Manhattan 163 W. 125th St. 5th Floor NY, NY 10027 (212) 961-8930 North side of 110th St. and above Staten Island 350 St. Mark's Place Room 105 Staten island, NY 10301 (718) 816-0277 Nassau County District Rent Office 50 Clinton Street, 6th Floor Hempstead, NY 11550 (516) 481-9494 Westchester County District Rent Office 55 Church Street, 3rd Floor White Plains, NY 10601 (914) 948-4434 Rockland County District Rent Office 94-96 North Main St. Spring Valley, NY 10977 (914) 425-6575 Albany Regional Office 119 Washington Avenue Albany, NY 12210 (518) 432-0596 Buffalo Regional Office Ellicot Square Building 295 Main St., Room 438 Buffalo, NY 14203 (716) 856-1382 ------------------------------------------------------------